WWDC 2013, Wall Street, and what it will take to get Apple stock moving again

Starting first thing in the morning, Apple’s World Wide Developer Conference opens its doors. Tim Cook and other execs will take the stage to share all that is new from Apple. And unless you’ve been living under a rock you know that Apple’s share price has dropped from $700 last September to below $400 in April, and has now recovered slightly to about $440 as I write this.

The obvious question to ask about the stock is, “Will WWDC get things moving again?” Of course I don’t know the right answer. I don’t have a crystal ball and I don’t think it’s particularly useful to try to pick off short term movements in a stock. But it’s still fun to talk about, and with the longer term in mind it can still be useful to discuss what next week means to Apple.

We all know that analysts and investors have been crapping on the stock for a few reasons. Most of them relate to fears of Apple losing its momentum (growth), losing its cool factor, and being attacked by Samsung’s highly successful Galaxy lineup. Oh, and of course people are afraid that Apple will start to go after the lower end of the market meaning that margins suffer.

the last couple of big upward movements came on the back of earnings releases, not developer events.

When looking at the stock, I can’t help but notice the last couple of big upward movements came on the back of earnings releases, not developer events. For example, Apple had a major breakout above $400 in early 2012, and started its climb towards $600 following the January earnings release. It then pulled back somewhat, and resumed its climb (reaching $700) after the July 2012 earnings call. Last year’s WWDC hardly moved the stock at all. But let’s dig a bit deeper. Obviously we know iOS is more important to Apple’s stock price than MacOS. The revenue split in favour of iOS is undeniable. And we also know that at WWDC 2012, the big reveal of iOS6 was much more about Apple than it was about adding new features.

But WWDC 2013 should be different. iOS7 is coming. Johnny Ive and Craig Federighi are in charge now. What will they bring? We’ll find out Monday. But even more important ... will Apple add new services (iRadio?) Will they dramatically improve the limited iCloud service? Can Apple ignite Wall Street’s interest again?

Wall Street responds to numbers. Numbers are driven by products.

Perhaps. I’m not counting on it unless we get more than a glimpse of some of these new game changing products that Tim Cook says Apple still has up its sleeve. Wall Street responds to numbers. Numbers are driven by products, and WWDC is where many new things are announced. Wall Street’s typical reaction? Finance experts suddenly become product reviewers and revise their financial models slightly as a result. Usually no major estimate changes come out of these events, and it is these estimate revisions that drive stocks in the short term.

But does WWDC matter? Of course. It’s one of many paths in the long term evolution of Apple. I’m a long term shareholder of this company and I’m incredibly excited about what they’ll unveil on Monday.

In the mean time, I’m still pleased to see that so many developers still support iOS before they bother with Android. Twitter’s Vine app only hit Google Play five months after being available for iOS. As long as this kind of developer behavior is commonplace, I don’t think Apple has anything to worry about.

Reader comments

WWDC 2013, Wall Street, and what it will take to get Apple stock moving again

"In the mean time, I’m still pleased to see that so many developers still support iOS before they bother with Android. Twitter’s Vine app only hit Google Play five months after being available for iOS. As long as this kind of developer behavior is commonplace, I don’t think Apple has anything to worry about"

This may be true in the English-speaking world. But, internationally, local developers may see the situation differently. In Europe, iPhone market share is dropping, and Android and WP are growing. In Asia, Android utterly dominates. If these trends continue, local developers will -- or already do --see other platforms than iOS as their main targets. I know a number of public sector service apps in Europe that already, today, are available only on Android and WP, but not on iOS.

Cook says market share does not matter. Perhaps it does not for Apple's immediate bottom line. But it does for developers who keep the platform alive, making their livelihood out of it. That is why Apple is in a dire need of a low-priced iPhone to defend its market share. But, above all, Apple is in an even direr need of innovation on iOS. The international version of iOS is still basically the same as iOS 4 was, since Siri, Passbook, Maps, etc. do not work outside select regions. iPhone is still not a global product and its plummeting share reflects this: The value proposition of an 1000$ iPhone is poorer every day. It is, indeed, mainly a product for the rich English-speaking part of the world. Google, in converse, makes global products, and hence succeeds so well. Everyone and their mother now uses Google's services thanks to Android -- and hence everyone also develops for Android. WP is going increasingly global and local at the same time as well -- and is growing, as a result. iPhone? I guess WWDC shows if it still has a future comparable to its past.

The problem with this thinking are several....
1) For this to matter, even if accurate, Apple would have to be down to a low percentage of marketshare, not simply possibly a bit behind. Developers only drop platforms that are insignificant, or too complex to develop for. Nearing a billion users isn't insignificant, no matter what the marketshare numbers are! (And I know this from Mac development over decades of being a fairly small %.)

2) Usage and 'installed' or 'shipped' are very different things!

3) A lot of phone buyers around the world buy Adroid because it is cheap. It gives them a phone with browser and email. But, unless they go beyond that, it is irrelevant to these developers.

5) Apple is MUCH more than a phone company. Phones are just one of their currently more successful products.

6) What matters is how profitable Apple is. Apple is wildly profitable. Google is actually the company that is overpriced. Apple is underpriced if they did next to nothing for the next year or two.... which obviously, they won't.

At least meet the flagship android device on the hardware spec level. They say specs don't matter but they do. They need to add a lot to ios 7, all the other phones look a lot more interesting one next to the other in the carrier stores, with their live tiles and widgets.

I think Wall St. has a reason why they are beating up on Apple and it all has to do with getting a profit by driving the stock down so when it rebounds there is money to be made. So I don't think WWDC will have an effect if anything the numbers will still go down even more and I hope it does because when it does I'll be buying stock. It's a great time to play the game too if Wall St. wants to make a profit then so can I off their stupidity. There is no good reason why the stock has lost value and so reason suggest it will eventually climb back up. So they can drive it lower and lower when it hits the level I'm waiting for I will be getting on and then when it starts to go up again I'll ride it to the top :)

Very true. Wall Street isn't much about investment these days, but playing the game of out-guessing the uninformed with the cash (more like gambling than investing, IMO). But, I think you're generally right to buy. When Apple releases their financials, it seems to have some impact on the rationality side of things. Apple has about as much chance if any company in the long term. My fear, about the markets as a whole, is what happens when everything collapses.... and when this will happen. But, again, Apple has as good of chance as any of surviving.